Fluorescent sensing TSRh6G-β-cyclodextrin fluorophore/adamantane-modified inclusion complex magnetic nanoparticles (TFIC MNPs) have been synthesized via the cooperation of a host–guest interaction and sol–gel grafting reaction. Powder X-ray diffraction, transmission electron microscopy, Fourier transform infrared spectroscopy, and UV-visible absorption and emission spectroscopy have been employed to characterize the material. Fluorescence and UV-visible spectra have shown that the resultant multifunctional nanoparticle sensors exhibit selective ‘turn-on’ type fluorescent enhancements and a clear color change from light brown to pink with Hg2+. Owing to a larger surface area and high permeability, TFIC MNPs exhibit remarkable selectivity and sensitivity for Hg2+, and its detection limit measures up to the micromolar level in aqueous solution. Most importantly, magnetic measurements have shown that TFIC magnetic nanoparticles are superparamagnetic and they can be separated and collected easily using a commercial magnet. These results not only solve the limitations in practical sensing applications of nanosensors, but also enable the fabrication of other multifunctional nanostructure-based hybrid nanomaterials.